Guide to Resolving Disputes through Commercial Arbitration

Commercial arbitration is a flexible and efficient method for resolving disputes, chosen voluntarily by parties as an alternative to litigation in courts. With its confidentiality and finality, commercial arbitration is increasingly favored in commercial transactions. This process is strictly governed by the Commercial Arbitration Law 2010, ensuring transparency and fairness. The following article provides a detailed overview of the procedures for resolving disputes through commercial arbitration.

1. What is Commercial Arbitration?

Commercial arbitration is a dispute resolution mechanism based on the agreement of the parties, allowing for swift and confidential resolution of conflicts. As stipulated in Clause 1, Article 3 of the Commercial Arbitration Law 2010:
“1. Commercial arbitration is a method of dispute resolution agreed upon by the parties and conducted in accordance with the provisions of this Law.”

2. Conditions for Applying Commercial Arbitration

The prerequisite for resolving disputes through commercial arbitration is the existence of an arbitration agreement between the parties. Specific conditions are outlined in Article 5 of the Commercial Arbitration Law 2010:
“Article 5. Conditions for Dispute Resolution by Arbitration:

1. A dispute may be resolved by arbitration if the parties have an arbitration agreement. The arbitration agreement may be established before or after the dispute arises.
2. In cases where an individual party to the arbitration agreement dies or loses civil capacity, the arbitration agreement remains valid for their heirs or legal representatives, unless otherwise agreed by the parties.
3. In cases where an organization that is a party to the arbitration agreement ceases operations, goes bankrupt, dissolves, merges, consolidates, splits, or transforms its organizational form, the arbitration agreement remains valid for the organization succeeding its rights and obligations, unless otherwise agreed by the parties.”

3. Disputes Falling under the Jurisdiction of Commercial Arbitration

Not all disputes can be resolved through arbitration. According to Article 2 of the Commercial Arbitration Law 2010, disputes within the jurisdiction of commercial arbitration include:

• Disputes arising from commercial activities.
• Disputes where at least one party engages in commercial activities.
• Other disputes that the law permits to be resolved by arbitration.

This ensures that only appropriate disputes are brought to arbitration, avoiding unnecessary legal conflicts.

4. Arbitration Agreement – The Foundation of the Process

The arbitration agreement is the commitment of the parties to resolve disputes through arbitration, as defined in Clause 2, Article 3 of the Commercial Arbitration Law 2010:
“An arbitration agreement is an agreement between the parties to resolve disputes that may arise or have arisen by arbitration.”

The form of the arbitration agreement is detailed in Article 16 of the Commercial Arbitration Law 2010:
“Article 16. Form of Arbitration Agreement

1. An arbitration agreement may be established in the form of an arbitration clause in a contract or as a separate agreement.
2. The arbitration agreement must be established in writing. The following forms of agreement are also considered to be in writing:
   a) Agreements established through exchanges between the parties via telegram, fax, telex, email, or other forms as prescribed by law;
   b) Agreements established through written exchanges of information between the parties;
   c) Agreements recorded in writing by a lawyer, notary public, or competent organization at the request of the parties;
   d) References in transactions to a document containing an arbitration agreement, such as a contract, document, company charter, or similar documents;
   e) Through exchanges regarding the statement of claim and defense that demonstrate the existence of an agreement proposed by one party and not denied by the other.”

However, an arbitration agreement will be deemed invalid if it falls under one of the cases listed in Article 18 of the Commercial Arbitration Law 2010, such as:

• The dispute is not within the jurisdiction of arbitration as per Article 2.
• The person establishing the agreement lacks authority or civil capacity.
• The form of the agreement does not comply with legal provisions.
• A party was deceived, threatened, or coerced during the establishment of the agreement and requests its invalidation.
• The agreement violates legal prohibitions.

5. Procedures for Dispute Resolution

The process of resolving disputes through commercial arbitration is designed to be rigorous, ensuring fairness and transparency, and includes the following steps as per the Commercial Arbitration Law 2010:

5.1. Filing a Statement of Claim and Commencement of Proceedings (Articles 30, 31, 32)

• At an Arbitration Center: The claimant submits the statement of claim and accompanying documents to the Arbitration Center. Proceedings commence when the Center receives the statement, unless otherwise agreed by the parties.
• Ad Hoc Arbitration: The claimant sends the statement of claim to the respondent. Proceedings commence when the respondent receives the statement, unless otherwise agreed.

5.2. Respondent’s Statement of Defense (Article 35)

• At an Arbitration Center: Within 30 days from receiving the statement of claim, the respondent must submit a statement of defense, unless otherwise stipulated by the Center’s procedural rules or agreed by the parties.
• Ad Hoc Arbitration: Within 30 days, the respondent submits the statement of defense and information about their chosen arbitrator to the claimant and arbitrators.

5.3. Establishment of the Arbitration Tribunal (Articles 40, 41)

The Arbitration Tribunal is established according to the rules of the Arbitration Center or the agreement of the parties in ad hoc arbitration, ensuring impartiality and independence.

5.4. Dispute Resolution Hearing (Articles 54, 55, 56, 57)

• Hearings are conducted in private, unless otherwise agreed by the parties, to protect confidentiality.
• The procedure for the hearing is governed by the Arbitration Center’s procedural rules or the parties’ agreement.
• Absence of Parties:
  • If the claimant is absent without a valid reason, they are deemed to have withdrawn the claim.
  • If the respondent is absent, the Tribunal continues to resolve the dispute.
  • Parties may request a postponement for valid reasons, with the postponement period determined by the Tribunal.

5.5. Mediation (Article 58)

The Arbitration Tribunal facilitates mediation if requested by the parties. If mediation is successful, a mediation record is drafted with the signatures of the parties and confirmation by the arbitrators. The Tribunal then issues a decision recognizing the parties’ agreement, which has the same effect as an arbitral award.

5.6. Issuance of the Arbitral Award (Articles 60, 61, 62, 63)

• The award is issued based on a majority vote. If no majority is reached, the award follows the opinion of the Tribunal’s Chairperson.
• The arbitral award is final, binding, and non-appealable, except in specific cases provided by law.

6. Statute of Limitations for Filing a Claim

The time limit for initiating arbitration proceedings is stipulated in Article 33 of the Commercial Arbitration Law 2010:
“Article 33. Statute of Limitations for Initiating Arbitration Proceedings
Unless otherwise provided by specialized laws, the statute of limitations for initiating arbitration proceedings is 02 years from the date the legal rights and interests are infringed.”

7. Language Used in Arbitration Proceedings

The language used in arbitration proceedings is determined under Article 10 of the Commercial Arbitration Law 2010:
“Article 10. Language
For disputes without a foreign element, the language used in arbitration proceedings is Vietnamese, except in cases where at least one party is a foreign-invested enterprise. If a party cannot use Vietnamese, they may select an interpreter to translate into Vietnamese.
For disputes with a foreign element or where at least one party is a foreign-invested enterprise, the language used in arbitration proceedings is agreed upon by the parties. If there is no agreement, the Arbitration Tribunal decides the language to be used.”

8. Venue for Dispute Resolution

The venue for arbitration is determined under Article 11 of the Commercial Arbitration Law 2010:
“Article 11. Venue for Dispute Resolution by Arbitration
The parties may agree on the venue for dispute resolution; if there is no agreement, the Arbitration Tribunal decides. The venue may be within or outside the territory of Vietnam.
Unless otherwise agreed by the parties, the Arbitration Tribunal may hold hearings at a location deemed appropriate for discussions among Tribunal members, taking witness statements, consulting experts, or inspecting goods, assets, or other documents.”

9. Loss of Right to Object

Under Article 13 of the Commercial Arbitration Law 2010, if a party discovers a violation but continues with the proceedings without objecting within the prescribed time limit, they lose the right to object:
“Article 13. Loss of Right to Object
If a party discovers a violation of this Law or the arbitration agreement but continues with the arbitration proceedings and does not object to such violations within the time limit prescribed by this Law, they lose the right to object at arbitration or in court.”

10. Applicable Law in Arbitration

Determining the applicable law is crucial for ensuring fairness. According to Article 14 of the Commercial Arbitration Law 2010:
“Article 14. Applicable Law for Dispute Resolution
For disputes without a foreign element, the Arbitration Tribunal applies Vietnamese law to resolve the dispute.
For disputes with a foreign element, the Arbitration Tribunal applies the law chosen by the parties; if there is no choice of law, the Arbitration Tribunal decides to apply the law it deems most appropriate.
If Vietnamese law or the law chosen by the parties does not provide specific provisions related to the dispute, the Arbitration Tribunal may apply international customs to resolve the dispute, provided such application or its consequences do not conflict with the fundamental principles of Vietnamese law.”

11. Enforcement of Arbitral Awards

Arbitral awards are final and binding on all parties. The State encourages voluntary compliance by the parties. If a party fails to comply voluntarily with an award, the other party may request enforcement under Article 66 of the Arbitration Act 2010:
“Article 66. Right to Request Enforcement of Arbitral Award
If the time limit for enforcing an arbitral award expires and the party obligated to comply fails to do so voluntarily and does not request the annulment of the award under Article 69 of this Arbitration Act, the party entitled to enforcement may submit a request to the competent civil judgment enforcement authority to enforce the arbitral award.
For awards issued by ad hoc arbitration, the entitled party may request enforcement by the competent civil judgment enforcement authority after the award has been registered as required under Article 62 of this Arbitration Act.”

The enforcement of arbitral awards shall comply with the provisions of the law on civil judgment enforcement, ensuring the protection of the rights and interests of the parties.

Disclaimer:

This article is intended for informational purposes only and does not constitute legal advice from HTH & Partners. The content represents the views of HTH & Partners and is subject to change without prior notice.

The legal provisions referenced in this article were valid at the time of publication but may have been amended or repealed by the time of reading. We strongly recommend consulting a qualified legal professional before applying any information contained herein.